Slower Emerging Market Growth Clouds Currency Outlook

The once-bright emerging-market stars of foreign exchange are looking a little dimmer these days, making the case for these currencies a little more difficult.

Emerging economies broadly are facing slowing rates of growth, forcing many central banks like those in South Korea, Turkey and Poland to cut interest rates in response. Capital Economics, for instance, estimates emerging-market growth slowed to a rate of 4% in the first quarter, from 5% in the last three months of 2012. In addition, a structural shift to domestic...